What is a brokerage trading confirmation?

Definition and Example of Brokerage Trade Confirmation

Brokerage trade confirmations are financial documents that detail the trades executed through your account. They are issued by your broker after each trade and differ from your account statements.

How does a Brokerage Trade Confirmation Work?

Brokerage trade confirmations are informational tools. They should be used in conjunction with your brokerage account statements to verify transactions and fees.

By understanding how to use these confirmations, you can carefully review the details of each trade made through your account. This allows you to:

• Maintain accurate records for tax time.
• Verify whether your broker executed the order according to your instructions.
• Spot errors or inaccurate information.

Each time you receive a statement, you should compare it with your trade confirmations from that time period. This can help identify unethical behavior by your broker, such as:

• Information in the trade confirmations that does not match the account statements.
• Unjustified fees.
• Fees that are higher than they should be.
• Undisclosed commissions when your broker is acting as an agent in trades.

What Does This Mean for Individual Investors?

Brokerage trade confirmations are a tool that helps you keep your financial affairs in order and check for discrepancies in your accounts, which is very important at tax time.

Trade confirmations can be used when filing your tax return to track capital gains and losses. If you are audited at any time, those confirmations can serve as documentation to support your tax returns.

The U.S. Department of the Treasury employs the official cost basis calculation method for tax records; custodians must record official tax records and any profits or losses. If there are discrepancies between your records and those issued by your broker, the Treasury will use the broker’s records.

To avoid issues at tax time, you should review your brokerage trade confirmations as soon as you receive them. Then, resolve any issues as soon as possible.

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Source: https://www.thebalancemoney.com/what-is-a-brokerage-trade-confirmation-4053824